With filing season opening on February 12, the Internal Revenue Service urged taxpayers to take some simple steps to help ensure they file accurate tax returns and speed their tax refunds to avoid a variety of pandemic-related issues.

Although every year the IRS encourages taxpayers to e-file their returns and use direct deposit to receive refunds, to those taxpayers who have previously not used e-file, the IRS emphasizes using it this year to avoid paper-related processing delays. Taxpayers can file electronically by using a tax professional, IRS Free File or other commercial tax preparation software. The IRS cautioned paper-filed tax returns and paper checks will take even longer this year due to a variety of reasons.

Taxpayers have until Thursday, April 15, 2021, to file their 2020 tax return and pay any tax owed. The IRS expects to receive more than 160 million individual tax returns this year with nine out of 10 returns filed electronically. At least eight out of 10 taxpayers get their refunds by using direct deposit.

Here is an in-depth perspective on how the IRS is preparing for a successful filing season.

Be tax ready: Review pandemic-related changes
Last year's sweeping set of tax changes not only affected individuals and their families but may also affect the tax return they're filing this year. A new IRS fact sheet explains what taxpayers need to know to file a complete and accurate tax return. The IRS recognizes that filing this year may be challenging for some taxpayers and it's important to understand how to claim credits and deductions, get a refund timely and meet all tax responsibilities.

Recovery Rebate Credit helps people still eligible for Economic Impact Payments
For those who may be eligible for stimulus payments, they should carefully review the guidelines for the Recovery Rebate Credit. Most people received Economic Impact Payments automatically, and anyone who received the maximum amount does not need to include any information about their payments when they file. However, those who didn't receive a payment or only received a partial payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return. Tax preparation software, including IRS Free File, will help taxpayers figure the amount.

New language preferences to help taxpayers
Additionally, this year for the first time, Forms 1040 and 1040-SR are available in Spanish, and the IRS has a new form allowing taxpayers to request that they receive information from the IRS in their preferred language. The Schedule LEP, Request for Change in Language Preference, will allow taxpayers to request information in some 20 different languages besides English.

The IRS also wants to remind taxpayers of other important changes that could impact their tax return this year.

Remember to factor in retirement plan distributions
Some taxpayers found it necessary to take coronavirus-related early distributions from 401(k) plans and traditional IRAs in 2020. Under the CARES Act, those distributions – up to $100,000 – are not subject to the 10% additional tax that otherwise generally applies to distributions made before an individual reaches age 59 ½. In addition, a coronavirus-related distribution can be included in income in equal installments over a three-year period, and an individual has three years to repay a coronavirus-related distribution to a plan or IRA and undo the tax consequences of the distribution.

Taxpayers should also remember that they can make contributions to traditional IRAs until April 15, 2021, and still deduct that amount on their 2020 tax return, if eligible.

New for 2020: non-itemizers can deduct $300 for charitable cash contributions
Previously, charitable contributions could only be deducted if taxpayers itemized their deductions.

However, with the CARES act, taxpayers who don't itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific or literary in purpose.

Now more than ever, e-file is best
Now more than ever, the safest and best way to file a complete and accurate tax return and get a refund is to file electronically and use direct deposit. Taxpayers can visit IRS.gov/filing for more details about IRS Free File, Free File Fillable Forms and Free tax preparation sites. E-filing is also available through a trusted tax professional. Free File is a great option for people who are only filing a tax return to claim the Recovery Rebate Credit, either because they didn't receive an Economic Impact Payment or did not receive the full amount.

The fastest way to get a refund is to file electronically and use direct deposit. Most refunds are issued in less than 21 days, but some refunds may take longer for a variety of reasons. Taxpayers can track their refund using Where's My Refund? 

Lovette, CPA, PA, is a full-service tax and accounting firm serving customers for more than 13 years. We serve the Triad, the Triangle, and the Sandhills. For more information, call us at 336.346.1960, visit our website, www.lovettecpa.com, or e-mail [email protected]. ​

​A lot can happen in 10 years. Since 2009, Lovette CPA, P.A., has served a wide range of clients in various industries throughout the Triad and Raleigh.
 
Over the past decade, Lovette CPA has served local corporations and individuals with tax and financial solutions. The firm provides hands-on service, prompt attention and tangible results. Centrally located in Greensboro, NC, the firm services clients from Raleigh to Winston-Salem and beyond. We recognize that our client's satisfaction is directly tied to our success. When you use us for your accounting and financial needs.
 
Our firm is a true business resource, offering a wide range of services to individuals, families and businesses of all sizes.
 
“One of the reasons clients appreciate us is the range we offer,” said Skip Lovette, Owner of Lovette CPA. “We are capable of handling the books and tax returns, but also have a deep knowledge of the business side, which can really help.”
 
We have offices in Greensboro and Raleigh. For more information, call us at 336.346.1960, visit our website, www.lovettecpa.com, or e-mail [email protected].

​At Lovette CPA, we are highly skilled and experienced with tax regulations and preparation for filing your return. However, we encourage you to be responsible for providing the right documents to ensure our tax returns are done properly and yield the highest return. Here’s some basic tips for keeping track of the right documents:
 
Track paperless records
Paperless banking may have turned shoeboxes into receipt relics of the past, while your online statements often contain key backup records for potential deductions such as:
 

• Charitable donations
• Spending for health care
• Job-search expenses
• Unreimbursed work expenses

 
Many of us ignore the line items from these statements until we start our annual tax-filing ritual. But you may save time by taking a few extra minutes each month to jot down tax-related information including:

• Expense title
• Check numbers
• Payee names
• Dollar amounts
• Dates

 
Create a spreadsheet dedicated to tax records. Throughout the year, consider downloading and printing online documents that will be available for only a limited time.
 
Think deductions throughout the year
Keep a mileage log in your car. Jot down the miles when you use your vehicle for volunteering, work, business or medical appointments as well as parking, bus and taxi fares and tolls can help you qualify for a deduction.
 
Hold on to cash receipts that document your transportation, charitable work, job-search and other tax-deductible activities. Hold on to any paperwork and documents that arrive in the mail, or receipts needed to prepare the return, even if you're not sure. It's always better to have too much information than not enough.
 
Life events you experience
Documents related to life events such as marriage, death of a spouse or divorce, alimony payment records, adoption papers and child custody agreements should all be saved. A newborn brings joy into your life and potential tax advantages. When you sit down to prepare your return, have these documents for dependent children close at hand:
 

• Social Security card
• Childcare receipts
• Contributions to college savings plans

 
Buying a home presents tax-saving opportunities. New homeowners should keep paperwork such as:
 

• Closing documents
• Home improvement invoices, receipts and proof of payment
• Annual mortgage statement

 
It's good to keep your closing documents in case you paid real estate taxes or points when you closed that don't appear on your year-end mortgage interest statement. Home improvements such as wheelchair ramps recommended by a doctor may be deductible as medical expenses if you itemize deductions. Certain energy efficiency improvements also may help you reduce your tax liability. Remember, when you use TurboTax to prepare your taxes, we'll ask you simple questions to ensure you don't overlook any possible deductions.
 
Keep your filing history
The value of a tax return doesn't end on April 15. You'll need to provide this document to get a mortgage, apply for student loans and to check the status of your refund on the Internal Revenue Service's "Where's My Refund?" web page. Generally, the IRS can audit you for three years after a filing date, and in some cases even longer, so guard your return copies and support documents just in case. The IRS can audit you as many years back as they would like if it suspects fraud, so keeping tax returns and supporting documents for at least seven to 10 years puts you on the safe side.
 
With more than 20 years of experience, Lovette CPA, P.A., is a true business resource, offering a wide range of services to individuals, families and businesses of all sizes. We have locations in Greensboro and Raleigh. For more information, call us at 336.346.1960, visit our website, www.lovettecpa.com, or e-mail [email protected].

Beware: student loans can have unforeseen, long-lasting implications for a family's financial future. At Lovette CPA we can help you navigate through the confusion to make a decision that makes the most sense to you and your family. The following will offer a description student loans that we hope you’ll find helpful.
There are two types of student loans.

• Federal student loans (FSLs) are issued directly to students by the federal government. Private student loans are issued by banks or other financial institutions.
• FSL interest rates are either subsidized or unsubsidized. Subsidized FSLs do not accrue interest while the student is in school. Unsubsidized FSLs accrue interest while the student remains in school.
• FSLs and private loans have different repayment terms. The repayment terms for FSLs are more flexible and offer relief if needed. Private student loan terms are set by the lender and offer little flexibility or relief if the student has trouble repaying.
• FSLs are based on the student's financial need, not on the borrower's credit rating, whether the borrower is the student, the parents, or someone else. The only exception among FSLs is the parent PLUS loan. Financial need is calculated as the difference between the cost of attending a school and the student's expected family contribution.

These four points are certainly not exhaustive, but they are a good place to start as you consider student loan options.
​
PLAN FOR FINANCING COLLEGE WITH STUDENT LOANS
There are many things to consider when financing college with student loans:

• FSLs typically have lower interest rates. The interest rate on an FSL is often lower than on a private student loan. (However, private student loans can have lower interest rates if the student and the co-signer have excellent credit.) Even if a student's or a parent's employer offers special access to private student loans, check out the availability of FSLs before choosing a private student loan.
• Keeping interest under control is important. While in school, students should consider paying the interest that accrues on an unsubsidized loan to minimize the overall interest they will pay on the debt.
• Students do not need to borrow all the money available. If possible, students should borrow only what they need to cover tuition, books, and fees, and pay living expenses with income earned by working part time or applying for a work-study program as part of the Free Application for Federal Student Aid form.
• Details can be costly and shouldn't be overlooked. When applying for a private student loan, ask questions of the lender, read the terms very carefully, and, more importantly, read the promissory note. Consult a CPA like the pros at Lovette CPA if you are unclear about any details.
• Whether students apply for an FSL or a private student loan, they should plan the loan backward. In other words, students should think ahead to the loan repayment. What are their job prospects given their major and degree? What will they earn right out of school? High student loan debt—whether for an FSL or a private loan—can limit the choices students have when they look for a job. Recent graduates may have to move back in with their parents until their student loans are paid off. That's why students should have a realistic idea of the amount of their monthly loan payments. This information can help them make more informed decisions about how they want to finance their college education and, in some cases, which major they elect.

INCOME-DRIVEN PLANS: THE DETAILS
If you’re struggling to make their monthly student loan payments, they may want to consider income-driven repayment (IDR) plans. These plans are available through the U.S. Department of Education's Office of Student Aid for any borrower with eligible federal student loans. All Direct and FFEL student loans are eligible. Parent PLUS and Perkins loans are eligible if consolidated. IDR plans help borrowers avoid delinquency and default when their monthly debt payment consumes a high proportion of their monthly income. IDR plans do have a downside: Paying back the loan over a longer period means the borrower will pay more interest.
All IDR plans have the following aspects in common:

• They can be used by borrowers who have a financial hardship. This is determined based on the size of the standard student loan payment as a percentage of the borrower's discretionary income. Discretionary income is calculated by a formula that takes into account family size, household income, and the size of the loan compared with 150% of the federal poverty level. It is used to determine qualification for a loan and the size of the monthly loan payments during the 12-month period during which a borrower is qualified.
• They require annual recertification. The borrower must reapply every 12 months.
• They offer loan forgiveness of any remaining student loan debt not paid after 20 to 25 years.
• The federal government may provide a subsidy on interest accrual if the monthly IDR payment does not cover the total amount of interest. In most cases, the subsidy is only given for a limited period (e.g., three years).

However, in other respects the types of IDR plans differ. It’s difficult to determine which IDR plan is right for you, and Lovette CPA can be your guide.

With more than 20 years of experience, Lovette CPA, P.A., is a true business resource, offering a wide range of services to individuals, families and businesses of all sizes. We have locations in Greensboro and Raleigh. For more information, call us at 336.346.1960, visit our website, www.lovettecpa.com, or e-mail [email protected].

​It's important to consider the strong benefits of preparing for the tax season early. Some simple organization for your taxes can save you time, money and frustration this tax season. Here are a few tips to consider as we enter tax season:
 
1. Organize your 2016 expense sheet and prepare to keep good records for 2017. Whether you keep track of your payments through a ledger, a notebook or accounting software, prepare 2016's expenses sooner rather than later and use a clean sheet for 2017. Remember that any deductibles from December should be recorded before they are misplaced. Lovette CPA suggests you record expenses, rather than rely on bank statements. This is particularly important for expenses late in the calendar year.
 
2. Consider an earlier refund. You can receive a refund faster by filing your taxes early. Last year, around 111 million out of 152 million returns resulted in refunds for the 2015 tax year. The average refund for the 2015 tax year was $2,857. If you are waiting for your refund, you can track it with the IRS website "Where's My Refund?"
 
3. File on time to save money. Filing your taxes on time can save you money. The IRS penalizes individual late filers and calculates penalties and interest on a case-by-case basis. There is no penalty for filing late if you are getting a refund although, if you do not claim your tax returns within three years, the money is forfeited to the U.S. Treasury. Filing extensions and paying any owed taxes will not be penalized either. A late filing penalty applies if you owe taxes and did not file a return. Late payment penalties are 0.5 percent of what you owe in taxes. For every month you don't pay the tax, the percentage you owe increases.
 
4. Start early to reduce or eliminate errors. Perhaps you noticed a trail of errors the last time you filed your taxes in a rush. Those can be avoided or corrected easily by filing early. There are common errors in many people's previous tax returns. They include incorrect Social Security numbers, incorrect filing status and failure to claim credits or deductions. Filing early gives you time to review your form and edit any mistakes before the filing deadline.
 
5. Misc. If you're self-employed If you are self-employed, paying taxes is different, as you will need to send quarterly estimated tax payments. If this is your first time being a self-employed taxpayer, seek help from the professionals at Lovette CPA. We will help you figure out how much to pay and what to deduct without being penalized.
 
With more than 20 years of experience, Lovette CPA, P.A., is a true business resource, offering a wide range of services to individuals, families and businesses of all sizes. We have locations in Greensboro and Raleigh. For more information, call us at 336.346.1960, visit our website, www.lovettecpa.com, or e-mail [email protected].